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The current topic: To Brexit or not...?

The prospects of the logistics sector if the UK leaves the EU

Erkrath, Germany, 2016-06-13 – Two weeks left until the EU referendum in the UK. On 23 June the British will decide the future of the Island and the rest of Europe and finally answer the question, if the UK is to become the first country to leave the European Union of their own accord. The predictions on the outcome of the referendum are still uncertain even so shortly before the British have to vote. According to the latest polls the supporters of and the Brits against the Brexit are almost on a dead level. Especially the transport and logistics industry are worrying about the consequences of a Brexit.

One thing is clear: The UK has a special status among the EU member countries, e.g. maintaining the Sterling Pound, not being a part of the Schengen area and a high level of economic sovereignty. And at the same time the UK economy is very close connected to the EU. A total of 43.7 percent of the export in 2015 went to EU countries and in regards to imports, a total of 53.1 percent were recorded. EU countries and thereby the EU itself are without a doubt the UK‘s main trading partner.

Brexit could become an expensive choice

Should the Brexit become a reality and should the UK want to achieve absolute independence, it will have a global impact. The UK would exclude themselves of aprox. 50 EU free trade agreements with third countries – and the agreements would have to be negotiated again. US president Barack Obama has already taken a position in April on the matter with the comment that the British would end “back in the queue” in regards to new bilateral trade negotiations. Trade barriers would increase the prices on import and the manufacturing and trade whose business depend on imports would feel the impact and in the end the consumers. Hence, the consequences would not only affect the exports but also the domestic manufacturers and trade. It would also affect the rest of Europe as well.

Most likely, all foreign processes in regards to the daily life and the economy would be hit by the Brexit impact. Customs control could very likely become a reality again which would mean prolonged transports and in total a slower logistics process.

One of a kind

Maria Toft Madsen, Country Manager Northern Europe at TimoCom, Europe’s largest transport platform, is among others responsible for the UK. Up to half a million freight offers and vehicle capacity is published on the TimoCom transport platform. Maria Toft Madsen’s prediction on the possible Brexit is somewhat calmer: “Of course the European transport and logistics industry prefer that the UK stays in the European Union. But I do not expect a Brexit to become a worst case scenario as many other experts. In our opinion, a decrease of the freight volume on the transport platform from and to the UK could happen. Nevertheless, if it happens, in time the situation will stabilise itself as an exchange of goods with the UK will continue. Our customers in the EU will without a doubt still transport goods to the UK, as it is now with other third countries like Turkey and Norway. The Sterling Pound falling could also lead to an increase in UK exports. Not only a worst case scenario is possible, but as the whole situation around Brexit is new, of course it arises many questions and uncertainty all across Europe.”

When asked what possible prospects the companies and business would have to face with a Brexit, the UK logistics industry does not show a clear picture. The majority (38%) believe that the Brexit would have a negative impact on the business growth, whereas 33% indicated it would not have an impact. Only one out of five participants believes in benefits, if Brexit should become reality.

Analysing the whole discussion, the articles and polls on the Brexit and taking it into consideration, one thing becomes very clear: Nothing is certain. The closer the date of the referendum is the more difficult is becomes to line out certainties and trends. One can only hope that in the end the UK will be led by well-conceived pros and cons when deciding on this essential matter.